Japan Cryptocurrency Market Report: Industry Trends and Future Prospects Research

In the cryptocurrency industry in Japan, two areas, NFT and Web3 games, dominate. High-quality projects have adopted a series of operational strategies, including establishing a strong community, localized marketing of the project, and winning the trust of users through long-term operations. The easing of Japanese regulations has drawn more attention to the cryptocurrency space in recent months.

Key Takeaways:

• In order to ensure the stability of the investment market and the safety of investors' assets, the Japanese government has formulated strict laws and regulations, which is a challenge for small cryptocurrency projects.
• STEPN is an example of a project that has successfully entered the Japanese market. The project seized the opportunity, carried out localized marketing, and actively built a community, which attracted a lot of attention in the Japanese market.

Globally, Japan is a unique market with great potential in the financial and investment sectors, with a strong retail forex industry and a thriving stock trading sector.

Since early cryptocurrencies were often hacked, the Japanese government took a conservative attitude towards the cryptocurrency industry and carefully supervised it. Even today, crypto asset options in Japan are relatively limited due to the oversight of the Financial Services Agency.

However, Japan approved Bitcoin as a legal form of payment in 2017, setting the scene for the rapid development of the cryptocurrency industry. Although the government was initially skeptical of the industry, recent events have shown that the government has become more supportive of the development of the blockchain industry in Japan as it continues to grow.

In April 2023, the Web 3.0 project team of Japan's ruling party released a white paper with recommendations to promote the development of Japan's encryption industry. In June 2023, Japan's "Fund Resolution Act Amendment Bill" was voted by the House of Lords, becoming the first country in the world to enact a stable currency bill.

However, due to some policy restrictions, such as the inability to directly invest in tokens, issue token projects, etc., the development of DeFi in Japan is still relatively limited. As such, NFTs and blockchain games are often considered major players in the Japanese cryptocurrency market.

If you want to know more about the Japanese cryptocurrency market, you can check out the full report here: Japan Crypto Market Report: Industry Trends and Future Prospects Study.

**What are the characteristics of successful blockchain projects in Japan? **

High-quality blockchain projects in Japan have adopted a series of operational strategies, including establishing a strong community, localizing projects, and winning the trust of users through long-term operations.

• Strong Community

One of the most important characteristics of a successful blockchain project is having a community of project supporters and loyal users. This community can help the project increase visibility, increase participation, and ensure the long-term operation of the project. There are various ways to achieve a thriving community, such as hosting community events, incentivizing users, and increasing the transparency of the project.

• Project Localization

The localized operation of the project is very important for various blockchain projects in the Japanese market. Due to Japan's strong cultural foundation and the dominance of Japanese in daily life, overseas projects need to adapt their products and services to local regulations, translate information into Japanese, and collaborate with local KOLs and media to hold local events . By reaching out to localized audiences, projects can gain more visibility and users.

• Long term operation

A successful blockchain currency project must have the ability to deal with risks and adapt to the market. To develop a viable product and concept, it is necessary to maintain the stable operation of the project in the fluctuation of the market. Japanese people are relatively rigorous and usually hesitant to new technologies. Therefore, projects must gradually establish a reputation in the Japanese market and operate for a long time in order to succeed in the market.

In addition to these characteristics, establishing partnerships with local Japanese KOLs, VCs, projects, and media can also help projects expand their influence, build credibility, and drive win-win growth. This is especially important in Japan, where industry giants, especially those in traditional sectors, still dominate the market. Therefore, start-ups should make full use of their own innovation advantages to establish partnerships with these existing giants, so as to leverage their strength to rise.

STEPN Case Study: The Development of Overseas Projects in the Japanese Market

STEPN is the first game to implement the "Move to Earn" economy model in the game and has achieved significant success in the Japanese cryptocurrency market.

STEPN Daily Active Users

The core game mechanism of STEPN is that in this game, players can buy sneakers NFT and get the in-game token GST by walking, jogging or running outdoors. These tokens can be used to upgrade existing sneakers or create new ones. STEPN has achieved great success in Japan thanks to several key factors.

First of all, the timing of entry plays a very critical role. When STEPN launches around the end of 2021, macro market conditions are relatively good. After the bull market in November 2021, many people have a lot of money on hand. The increased liquidity triggers a greater willingness of a large number of users to purchase in-game items. Although the project party itself cannot control the market trend, it is still an important determinant of the success of the project.

In addition, it should be noted that compared with players from other countries, Japanese players usually have higher spending power. They are often willing to invest a lot of money in NFT items in the game, and some even invest in five or six figure amounts in pursuit of maximizing game revenue.

This level of spending is rarely seen in the gaming space compared to other countries. For example, Axie Infinity is a very popular game in the Philippines, driven primarily by scholarship. Players can rent three Axies to join a guild for a low price, which allows players to get into the game with almost no upfront cost. Therefore, individuals can participate with less initial capital.

Early in the game's launch, STEPN identified Japan as its target market. Therefore, before players from other parts of the world join the game economy system, Japanese players have used their strong purchasing power to shape the in-game market circulation mechanism, making their in-game market healthier and more liquid than the global average. The Japanese are generally less involved in the global community, STEPN successfully adapted to the local Japanese community and started a positive cycle, so STEPN was discussed more in the Japanese market than in other major markets around the world.

Source: Google Trends

The use of GPS in games can also be seen as an advantage. STEPN requires accurate GPS tracking to prevent cheating and maintain the integrity of the in-game economy, while also injecting stakes in real-time. Many Japanese use iPhones with accurate GPS systems, making it easy for players to start playing and earn money.

The Gacha system is a unique feature widely used in Japanese mobile games where players exchange game tokens for random in-game items. The Gacha system has been an important factor driving game growth in Web2 mobile games. STEPN has successfully integrated this concept into the game, increasing the engagement and interest of gamers.

At the height of the game, STEPN players were making about $3,000 a day just by walking. The game's user-friendliness and generous rewards sparked a viral frenzy and even a ring-breaking effect.

Other projects can learn strategies from successes like STEPN. It is important to note, however, that macro market conditions and other external factors can also have a large impact on successfully operating projects in the Japanese market.

Opportunities and Challenges of the Cryptocurrency Industry in Japan

Japan has a strong and well-established traditional financial system, which provides a solid foundation for the development of its blockchain and Web3 industries.

When it comes to the cryptocurrency market in Japan, compliance has always been an important issue. In order to ensure the stability of the investment market and the security of investors' assets, Japan has strict laws and regulations in the field of blockchain. However, while these regulations protect the industry, they also pose challenges to some start-up cryptocurrency projects. The entry and development of these projects has been hindered by compliance costs and high tax burdens. Additionally, the lengthy approval process for token listings has contributed to a perceived lack of vitality in the market and led to a loss of confidence in the space.

For a long time, Japan has been taking stability and prudence as its main style in financial affairs. This attitude may limit the innovation of businesses and the flexibility of the market, but at the same time protects traders from significant risks. Innovation is the key to the success of cryptocurrencies, so the lack of innovation may be a big reason why Japan's cryptocurrency industry lags behind other countries.

The good news is that in April 2023, the Web 3.0 project team of Japan's ruling party released a white paper with recommendations to promote the development of the encryption industry in Japan. In June 2023, Japan's "Fund Resolution Act Amendment" was voted by the House of Lords, and Japan became the first country in the world to enact a stable currency bill.

Institutional investors in Japan are showing growing interest in cryptocurrencies and a growing awareness of the industry’s potential. The growing market interest may greatly promote the development of the entire cryptocurrency industry, bringing more liquidity, stability and credibility to the market, which in turn attracts more interest from retail and institutional investors.

Japan's game market and its strong IP resources have proven its great potential. The combination of Japan's unique cultural characteristics and strong financial system will make it a global leader with great potential in the Web3 industry. Leveraging its strengths to drive innovation and growth, Japan has the opportunity to lead the future of the global Web3 industry.